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US TSYS: Treasury Yields Climb to Late July Levels Ahead Wednesday's Oct CPI

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  • Treasuries continued to ebb in the lead-up to Wednesday's key October CPI inflation data, followed by PPI on Thursday. From our October CPI preview out today (PDF) - sequential core CPI is seen coming in basically the same as prior (roughly 0.30%), with headline edging up (0.20% vs 0.18% September).
  • Initial technical support of 109-07 (Low Nov 6 and the bear trigger) remained intact as Dec'24 10Y futures traded down to 109-10 low, Tsy yields are back at late July levels (10Y tapped 3.654%) while the 2s10s curve bear steepened by 4.307 to 9.133 in late trade.
  • Large SFRZ4 sale (over 50k 95.565) continued to temper year end rate cut chances. Projected rate cuts into early 2025 compared to early Tuesday levels (*): Dec'24 cumulative -15.5bp (-17.2bp), Jan'25 -23.0bp (-25.2bp), Mar'25 -36.0bp (-38.2bp), May'25 -41.8bp (-44.3bp).
  • Minneapolis Fed President Kashkari suggests that it could take significant upside inflation surprises in the next two months to cause the Fed to deviate from cutting rates a third consecutive time at the next meeting: “If we saw inflation surprises to the upside between now and then, that might give us pause...It’d be hard to imagine the labor market really heats up between now and December. There’s just not that much time...There’d have to be a surprise on the inflation front to change the outlook so dramatically.”
  • Cross market roundup: crude trades near steady (WTI +0.02 at 68.06, Gold -19.03 at 2,599.79, USD continues to rise.
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  • Treasuries continued to ebb in the lead-up to Wednesday's key October CPI inflation data, followed by PPI on Thursday. From our October CPI preview out today (PDF) - sequential core CPI is seen coming in basically the same as prior (roughly 0.30%), with headline edging up (0.20% vs 0.18% September).
  • Initial technical support of 109-07 (Low Nov 6 and the bear trigger) remained intact as Dec'24 10Y futures traded down to 109-10 low, Tsy yields are back at late July levels (10Y tapped 3.654%) while the 2s10s curve bear steepened by 4.307 to 9.133 in late trade.
  • Large SFRZ4 sale (over 50k 95.565) continued to temper year end rate cut chances. Projected rate cuts into early 2025 compared to early Tuesday levels (*): Dec'24 cumulative -15.5bp (-17.2bp), Jan'25 -23.0bp (-25.2bp), Mar'25 -36.0bp (-38.2bp), May'25 -41.8bp (-44.3bp).
  • Minneapolis Fed President Kashkari suggests that it could take significant upside inflation surprises in the next two months to cause the Fed to deviate from cutting rates a third consecutive time at the next meeting: “If we saw inflation surprises to the upside between now and then, that might give us pause...It’d be hard to imagine the labor market really heats up between now and December. There’s just not that much time...There’d have to be a surprise on the inflation front to change the outlook so dramatically.”
  • Cross market roundup: crude trades near steady (WTI +0.02 at 68.06, Gold -19.03 at 2,599.79, USD continues to rise.